By Anita Hamilton

A deal announced Thursday by New York Gov. Kathy Hochul with the state legislature makes the controversial pied-à-terre tax on second homes in New York City valued at more than $5 million look almost certain to move ahead.

Final details of the plan, which is part of her 2027 budget proposal, are still being worked out to bridge the gap between the assessed and actual market value of affected properties.

But a fiscal note released by New York City Comptroller Mark Levine last month on the tax's revenue implications showed a tiered plan with residences valued above $25 million racking up the highest surcharges of 4%. In that scenario, the 4% rate would only apply to the value of $25 million or higher, with lower rates starting at 0.5% for properties that aren't primary residences valued between $5 million and $6 million.

Hochul says the new tax would bring an estimated $500 million in additional tax revenue to New York City each year.

When the proposal was first announced on tax day, April 15, New York City Mayor Zohran Mamdani singled out the $238 million penthouse overlooking Central Park and owned by Citadel CEO Ken Griffin as a prime example of the type of property that would be targeted. The new tax would add about an additional $9 million in annual taxes to Griffin's condo.

While the extra revenue is good news for the city, which is looking to close an expected deficit of as much as $10 billion in 2027, some worry about its ancillary effects. Specifically, it could lower other taxes collected by the city if deep-pocketed CEOs like Griffin or Apollo Management's Marc Rowan decide to move more workers outside the city in response.

Griffin said earlier this week that the new tax led him to expand jobs at his company's Miami hub. He relocated the hedge fund's headquarters from Chicago to Florida in 2022 after a similar clash with politicians in Illinois and has called Chicago a "failed city-state."

He added that he wants Citadel to be in a state "that embraces people having an opportunity to live the American Dream, and a dream of earned success, not a dream of redistributed handouts that leave people dependent on government for their lives and their livelihoods in a way that takes away dignity and honor."

Apollo, meanwhile, is looking to open a second headquarters in either Florida or Texas, Bloomberg reported in March. Neither Citadel nor Apollo replied to a request for comment on the deal.

Pro-business groups such as the Partnership for New York City have warned that the new tax could backfire. "A surcharge that discourages high-end nonresident purchases or causes those buyers to bid lower could erode property assessments and transfer tax receipts citywide, potentially offsetting much or all of the projected $500 million gain," they wrote last month.

Mamdani, who supports the new tax plan, has dismissed such fears as overblown. The stocks of New York City real estate investment trusts reflect that investors aren't concerned. SL Green Realty, $Vornado Realty Trust(VNO-N)$, and Empire State Realty Trust were all rising Thursday.

A vote on the budget could happen within the next week.

Write to Anita Hamilton at anita.hamilton@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

May 07, 2026 14:14 ET (18:14 GMT)

Copyright (c) 2026 Dow Jones & Company, Inc.